(In reply to comment #5)
> Is the package group needed? Its not an application that can be launched.
Package group is optional but grouping has nothing to do with whether the application is launched or not. Yum and ffriends doesn't use the RPM groups information at all anymore but instead we use comps (http://fedoraproject.org/wiki/How_to_use_and_edit_comps.xml_for_package_groups). However the package group information is still used by other package managers like apt, synaptic and smart. Just FYI.

Regardless of md5sum issues, if you are generating a tarball, I highly recommend using xz compression or if that is not feasible for any odd reasons, use bz2. xz offers a much better compression than gzip which not incurring the computation cost of bz2. We are increasingly standardizing around xz (rpm uses it by default, livecd-creator uses it by default starting from Fedora 15, GNOME is dropping everything but xz compressed tarballs etc).